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DECISION No

DECISION No. 133/2001/QD-TTg OF SEPTEMBER 10, 2001 PROMULGATING THE REGULATION ON EXPORT SUPPORT CREDIT

THE PRIME MINISTER

Pursuant to the September 30, 1992 Law on Organization of the Government;

Pursuant to the June 1, 1998 Law No.03/1998/QH on Domestic Investment Promotion (amended);

Pursuant to the Government�s Decree No.50/1999/ND-CP of July 8, 1999 on organization and operation of the Development Assistance Fund;

Pursuant to the Government�s Resolution No.05/2001/NQ-CP of May 24, 2001;

At the proposal of the Finance Minister,

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on export support credit. The Development Assistance Fund shall perform the task of export support credit according to the provisions of this Regulation.

Article 2.- To raise the level of the Development Assistance Fund�s charter capital to VND 5,000 billion.

Article 3.- This Decision takes effect 15 days after its signing.

Article 4.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the presidents of the Committee of the provinces and centrally-run cities, the chairman of the Managing Board and the General Director of the Development Assistance Fund shall have to implement this Decision.

On behalf of the Government

Prime Minister
PHAN VAN KHAI

REGULATION ON EXPORT SUPPORT CREDIT

(Promulgated together with the Prime Minister�s Decision No.133/2001/QD-TTg of September 10, 2001)

Chapter I

GENERAL PROVISIONS

Article 1.- Export support credit is the State�s preference aiming to support enterprises, economic organizations and individuals in developing the production and trading of export goods under the State�s policy on export promotion.

Article 2.- Forms of export support credit

1. Medium- and long-term export support credit, including:

a) Medium- and long-term investment loans;

b) Post-investment interest rate support;

c) Investment credit guaranty.

2. Short-term export support credit, including:

a) Short-term loans (including loans provided to enterprises exporting goods with deferred payment of up to 720 days);

b) Bidding participation guaranty and contract performance guaranty.

Article 3.- Objects of application

1. State enterprises.

2. Joint- stock companies.

3. Limited liability companies.

4. Partnerships.

5. Private enterprises.

6. Cooperatives, unions of cooperatives.

7. Family households and individuals with business registration.

(Hereinafter referred collectively to as units).

Article 4.- Currency for loan provision and debt repayment

1. Lending currency: Vietnam dong

2. Debt repayment currencies: Units shall repay debts in Vietnam dong. Units with freely convertible currencies may repay debts in foreign currencies at the buying rates of the Bank for Foreign Trade of Vietnam at the time of debt repayment.

Article 5.- The Development Assistance Fund performs the task of export support credit under the provisions of this Regulation. The Development Assistance Fund and units shall have to manage and use the export support credit sources for the right purpose and with efficiency.

Chapter II

MEDIUM- AND LONG-TERM EXPORT SUPPORT CREDIT

Section I. MEDIUM- AND LONG-TERM INVESTMENT LOANS

Article 6.- Lending objects

1. Units with projects on the production, processing, order-production of export goods and with export values under their plans on sale of products of the projects being at least equal to 30% of their annual turnover.

2. Units having demand to borrow capital for contribution of investment capital to joint-venture projects on the production, processing or order-production of export goods by Vietnamese enterprises, with export values under their plans on sale of products of the joint-venture projects being at least equal to 80% of their annual turnover.

Article 7.- Lending conditions

1. Being objects prescribed in Article 6 of this Regulation.

2. Having financial plans, loan repayment plans, appraised by the Development Assistance Fund before deciding the investment.

3. The projects have gone through all investment and construction procedures strictly according to regulations.

4. The investors have the financial capability to repay debts within the committed time limits.

5. Having implemented the regulations on loan guaranty prescribed in Article 12 of this Regulation.

Article 8.- Borrowed capital levels

1. Group A projects shall comply with the Prime Minister�s decisions.

2. Groups B and C projects shall comply with the investment decisions of competent authorities, but the borrowed capital levels must not exceed 90% of the projects� investment capital.

The annual lending level shall be made according to project�s tempo.

Article 9.- The applicable lending interest rate shall be the development investment credit interest rate of the State.

Article 10.- The maximum lending term shall be 10 years. In special cases where the lending term is more than 10 years, it shall be decided by the Finance Minister at the proposal of the General Director of the Development Assistance Fund.

Article 11.- Loan debt repayment

1. Investors have the responsibility to repay the borrowed capital strictly according to the signed credit contracts. The investors may use the following sources for debt repayment:

a) Fixed asset depreciation or sources of collected charges on the use of assets formulated from borrowed capital;

b) After-tax profits and other lawful sources of the investors.

2. If due debts cannot be repaid, the debt amounts which cannot be repaid shall be turned into overdue debts and investors shall have to bear the interest rate on overdue debts.

Article 12.- Investors may use assets formulated from the borrowed capital to secure loans. When they have not paid up all their debts yet, the investors must not assign, sell, donate, give as presents, mortgage, pledge or secure the assets as guaranty to borrow capital at other places.

Section II. POST-INVESTMENT INTEREST RATE SUPPORT

Article 13.- Subjects entitled to post-investment interest rate support

Units with projects prescribed in Clause 1, Article 6 of this Regulation but having not yet been provided with preferential loans or investment credit guaranty of the State, while the investors borrow capital of credit institutions lawfully operating in Vietnam.

Article 14.- Conditions to enjoy post-investment interest rate support

1. Units with projects prescribed in Article 13 of this Regulation, have completed and put the projects to use, and repaid their borrowed capital according to the credit contracts.

2. The Development Assistance Fund has so approved and signed the post-investment interest rate support contracts.

Article 15.- The level of post-investment interest rate support for each project is equal to the difference between the loan interest rate of the credit institution and the development investment credit interest rate of the State at the time of withdrawal of borrowed capital. To assign the Finance Minister to guide in detail the post-investment interest rate support.

Section III. INVESTMENT CREDIT GUARANTY

Article 16.- Subjects entitled to guaranty

Projects prescribed in Clause 1, Article 6 of this Regulation, when borrowing capital from credit institutions lawfully operating in Vietnam, that have demand for guaranty.

Article 17.- Guaranty conditions

1. Being subjects entitled to investment credit guaranty prescribed in Article 16 of this Regulation, but having not yet borrowed capital or have borrowed part of the development investment credit capital of the State.

2. Having the investment projects already appraised by the credit institutions which have agreed to provide loans, having filed written request to the Development Assistance Fund for guaranty.

3. The Development Assistance Fund agrees to provide guaranty on the basis of the appraisal results of the credit institutions.

Article 18.- The guaranty level for each project shall be decided by the Development Assistance Fund but shall not exceed 100% of the borrowed capital of the credit institutions within the total investment capital as provided for by law.

Article 19.- Units provided with investment credit guaranty shall have to pay guaranty charge being equal to 0.3%/ year calculated on the amount being guaranteed.

Article 20.- Financial liability when investors are unable to repay debts

Where investors cannot repay loan debts according to the signed credit contracts,

1. The capital-lending credit institutions and the Development Assistance Fund shall jointly and equally bear the financial liability for the guaranteed amount.

2. The investors must acknowledge compulsory debts with the Development Assistance Fund for the amount paid for them by the Development Assistance Fund at the penalizing interest rate being 130% of the lending interest rates of the credit institutions.

3. When having sources for debt repayment, the investors shall have to simultaneously repay debts to the credit institutions and the Development Assistance Fund in equal proportions.

Chapter III

SHORT-TERM EXPORT SUPPORT CREDIT

Section I. SHORT-TERM CAPITAL LOANS

Article 21.- Subjects entitled to short-term capital loans shall be units which export goods, including:

1. Units producing, processing or trading in goods items under the program on export promotion preferences prescribed every year or in each period by the Prime Minister.

2. Contracts for exportation into new markets or the maintenance of traditional markets according to the regulations of the Prime Minister.

3. Units with projects prescribed in Clause 1, Article 6 of this Regulation, which have been provided by the Development Assistance Fund with investment credit loan capital, short-term loan capital in the first year of signing the export contracts since the projects are completed and put into production.

Article 22.- Lending conditions

1. Being subjects entitled to short-term loans prescribed in Article 21 of this Regulation.

2. Having production and business plans and debt repayment capability.

3. Having export contracts.

4. Implementing the loan security provisions in Article 26 of this Regulation.

Article 23.- Lending interest rates

The short-term lending interest rate shall be equal to 80% of the development investment credit interest rate of the State at the time of signing the credit contract and be fixed throughout the capital borrowing term. The overdue debt interest rate shall be equal to 150% of the interest rate on immature debts.

Article 24.- The lending term for short-term loan depends on the demand for capital for the performance of export contract, but shall not exceed 12 months.

Where loans are provided for the export of goods with deferred payment of up to 720 days, the list of goods items prescribed by the Prime Minister shall be complied with.

Article 25.- Lending forms

1. Lending before goods delivery

Units can borrow short-term loans for the purchase of raw materials, materials and production elements to perform the export contracts.

The borrowing levels shall not exceed 80% of the L/C value or not exceed 70% of the export contract value. For goods items exported under quotas, the maximum lending level shall be equal to the remaining goods value within the quotas calculated to the time of capital borrowing.

2. Lending after goods delivery

The lending after goods delivery shall be effected when units have valid bills of exchange.

a) Valid bills of exchange are those issued by Vietnamese exporting units strictly according to international practices on bills of exchange, enclosed with sets of export goods vouchers suitable to the conditions of L/C issued by foreign banks or the foreign banks have endorsed the payment;

b) The lending level: The maximum level is equal to 90% of value of valid bills of exchange.

Article 26.- Loan security

1. For pre-good delivery lending, the capital-borrowing units must have assets for mortgage, pledge, with the minimum value being equal to 30% of the borrowed capital amount.

2. For the lending of valid bills of exchange, units must produce the valid bills of exchange, enclosed with sets of export goods vouchers to prove the capital borrowing.

Section II. BIDDING PARTICIPATION GUARANTY AND CONTRACT PERFORMANCE GUARANTY

Article 27.- Units being subjects prescribed in Article 21 of this Regulation shall be provided with bidding participation guaranty or contract performance guaranty if they have demand therefor.

1. The maximum guaranty level shall not exceed 3% of the bid price (for bidding participation guaranty), and 10% of the contractual value (for contract performance guaranty).

2. The guaranty time limits shall be in line with the time limits for performance of obligations by units.

3. Units provided with bidding participation guaranty and/or contract performance guaranty shall not have to pay guaranty charge.

4. Where the Development Assistance Fund has to pay the importing parties the guaranteed sums of money, the guaranteed units must acknowledge compulsory debts with the Development Assistance Fund for the sums of money paid on their behalf at the penalizing interest rate being equal to 150% of the interest rate on short-term credit loan capital in support of export.

Chapter IV

HANDLING RISKS

Article 28.- Units facing risks which render them unable to repay their loan debts according to credit contracts shall, depending on the causes and extents, be handled as follows:

1. Due to objective, force majeure causes: natural calamities, unexpected fires which cause property loss; due to readjustment of State policies; due to domestic and overseas market price fluctuation which greatly affects trade activities; importers or banks in service of importers have gone bankrupt, thus being unable to make payment for units, the units shall be considered for debt extension, loan interest exemption or reduction, debt freezing. For special cases, loan debts may be partially or fully written off.

2. Other cases shall be handled according to the provisions of law.

Article 29.- Risk-handling competence

1. For projects on medium- and long-term capital borrowing, credit guaranty in support of export.

a) The debt extension shall be decided by the General Director of the Development Assistance Fund;

b) The loan interest exemption and reduction shall be decided by the Finance Minister, based on the proposal of the General Director of the Development Assistance Fund;

c) The debt freezing or remission shall be decided by the Prime Minister, based on the proposal of the General Director of the Development Assistance Fund and the opinions of the Finance Ministry.

2. Units which borrow short-term loans shall be provided with bidding participation guaranty and export contract performance guaranty.

a) The debt extension and the loan interest exemption and reduction shall be decided by the General Director of the Development Assistance Fund;

b) The debt freezing and remission shall be decided by the Finance Minister on the basis of the proposal of the General Director of the Development Assistance Fund.

Article 30.- Deduction for setting up risk reserve fund

Annually, the Development Assistance Fund may make deduction for setting up risk reserve fund to handle risks incurred due to units� incapability to repay loan debts according to credit contracts.

1. The deduction for setting up risk reserve fund for medium- and long-term investment projects shall comply with the Government�s stipulations on development investment credit of the State.

2. The deduction for setting up risk reserve fund for short-term loans, bidding participation guaranty and export contract performance guaranty shall be carried out as follows:

a) Deducting 10% calculated on the debit balance of short-term loans which have become overdue for less than 181 days and the amount of money already paid by the Development Assistance Fund on behalf of the units guaranteed by the Fund, but not yet recovered within a duration of less than 61 days;

b) Deducting 20% calculated on the debit balance of the short-term capital loans which have become overdue for between 181 days and 361 days and the amount of money already paid by the Development Assistance Fund on behalf of units guaranteed by the Fund, but not yet recovered within a duration of between 61 days and under 181 days;

c) Deducting 30% calculated on the debit balance of short-term loans which have become overdue for 361 days or more and the amount of money already paid by the Development Assistance Fund on behalf of units guaranteed by the Fund, but not yet recovered within the duration of 181 days or more.

3. The deduction amounts for setting up risk reserve fund shall be accounted into expenses for professional operation of the Development Assistance Fund.

Chapter V

SOURCES OF CREDIT CAPITAL IN SUPPORT OF EXPORT

Article 31.- The sources of capital to make export-support credit shall be incorporated in the plans on the State�s development investment credit assigned annually to the Development Assistance Fund by the Prime Minister, including:

1. The charter capital allocated by the State budget.

2. Capital annually allocated directly by the State budget for the performance of export- support tasks.

3. Capital mobilized in the country by the Development Assistance Fund.

4. Capital mobilized from abroad by Development Assistance Fund.

5. Other lawful capital sources.

Article 32.- The Development Assistance Fund shall be provided by the State budget with subsidies for the interest rate difference for the performance of the task of export support credit.

The Finance Minister shall guide in detail the provision of subsidies for interest rate difference.

Chapter VI

POWERS AND RESPONSIBILITIES OF THE STATE MANAGEMENT AGENCIES AND DEVELOPMENT ASSISTANCE FUND

Article 33.- The Finance Ministry shall have the power and responsibility:

1. To guide, inspect and supervise the Development Assistance Fund in providing export support credit strictly according to this Regulation.

2. To coordinate with the Ministry of Planning and Investment in submitting to the Prime Minister for decision the capital plans and sources to provide export-support credit.

3. To allocate State budget annually; guide the Development Assistance Fund in mobilizing capital for the performance of task of providing credit in support of export.

4. To handle risks according to competence or report them to the Prime Minister for handling according to Article 29 of this Regulation.

5. To report to the Prime Minister on the situation of providing export support credit; to propose financial solutions to the promotion of export- support credit activities.

Article 34.- The Ministry of Planning and Investment shall have the power and responsibility:

1. To base itself on the export development objectives and orientations to draw up and submit to the Prime Minister for assignment the annual plan to the Development Assistance Fund on sources of credit capital in support of export according to support form.

2. To coordinate with the Finance Ministry in proposing to the Prime Minister solutions to promote export support credit activities.

Article 35.- The Trade Ministry shall have the power and responsibility:

1. To assume the prime responsibility and coordinate with the Ministry of Finance and the Ministry of Planning and Investment, in drawing up and submitting to the Prime Minister for approval the export goods development programs, the export goods promotion priority programs for each year or each period.

2. To report to the Prime Minister for decision cases entitled to short-term loans under the provisions in Clause 1, Clause 2 of Article 21 of this Regulation.

3. To widely publicize information on export markets; to inspect and guide exporting units in carrying out export activities; to propose solutions to the market expansion and development.

Article 36.- The Vietnam State Bank shall have the power and responsibility:

1. To direct the commercial banks to coordinate with the Development Assistance Fund in organizing the performance of the task of export support credit.

2. The Development Assistance Fund can effect payment and organize domestic and international payment services to perform the task of export-support credit. The State Bank of Vietnam shall guide the implementation thereof.

Article 37.- The ministries, the ministerial-level agencies, the agencies attached to the Government, the People�s Committees of the provinces and centrally-run cities and the Corporations 91 shall have the power and responsibility:

1. To widely publicize the planning on development of branches, fields, products, territorial regions in each period for use as basis for the elaboration and implementation of the credit policy in support of export.

2. To coordinate with the Finance Ministry and the Development Assistance Fund in settling matters arising in the course of providing export support credit and when units cannot repay debts.

Article 38.- The Development Assistance Fund have the power and responsibility:

1. To draw up and report to the Ministry of Planning and Investment and the Finance Ministry the plans on the following:

a) The total credit capital in support of export in various forms of support;

b) The capital mobilization and mobilization solutions in order to perform the task of export support credit.

2. To organize and implement the task of providing credit in support of export strictly according to the provisions of this Regulation.

3. To guide the operational process of export support credit.

4. To handle risks according to the provisions in Article 29 of this Regulation.

5. To quarterly and annually report to the Prime Minister, the Finance Minister and the Minister of Planning and Investment on the situation of providing export support credit.

Chapter VII

IMPLEMENTATION PROVISIONS

Article 39.- The Finance Minister, the Planning and Investment Minister, the Trade Minister, the Vietnam State Bank Governor, the General Directors of Corporations 91, the Managing Board chairman and the General Director of the Development Assistance Fund shall guide the implementation of this Regulation.

Prime Minister
PHAN VAN KHAI